Articles

• TAGS:
• Indonesia
• Sustainability

Introduction

Indonesia’s ambition to produce 1 million barrels of oil per day (BOPD) by 2030 remains a central, yet increasingly elusive, pillar of its national energy policy.

While the Ministry of Energy and Mineral Resources maintains this target, a report prepared by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) shows a slowing down in the extraction process. In 2024, oil lifting only reached approximately 560,000-590,000 BOPD.

This is not to say nothing is being done; the state has undertaken efforts such as auctioning new oil blocks, restarting idle wells and renewing interest from major oil companies like Chevron, Shell, and TotalEnergies. However, the 1 million BOPD target may not be reached until the mid-2030s.

This delay could be explained by Indonesia’s mature oil wells. Roughly 70-80% of oil wells in Indonesia have been operating for over 30 years, passing their prime a while ago. The problem with these old wells is that their reservoir pressure has dropped naturally, thus complicating the process of extracting the remaining oil supply.

Lifting out this remainder supply requires different tools and techniques that differ from those used on younger oil wells.

Current Landscape

The challenge lies not in discovering new oil fields but in crafting a policy framework to revitalise these matured fields.

Enhanced Oil Recovery (EOR) is a technique that could keep these old wells productive through three methods: steam, gas or chemical. The steam method has been implemented in places like Duri, while the application of the gas method remains limited. In this context, this piece focuses solely on chemical EOR, which has been argued as the most practical option for Indonesia’s oil fields.

Chemical EOR cleans and frees trapped oil in rock pores using soap-like substances by lowering the oil surface tension and allowing oil droplets to flow and be collected. However, this method is still economically non-viable at the moment; the soap-like substances, also called petrochemical surfactants (petroleum sulphonate), are expensive and can only be sourced from outside the country.

The implementation of chemical-based EOR in Indonesia is thus not stalled by a lack of technology but by a “vicious cycle” of economic dependency that leaves Indonesia reliant on pricey imported chemicals. This dependency burdens the trade balance and exposes Indonesia’s energy security to the volatility of global prices. Breaking this cycle requires a strategic move beyond the energy sector in isolation.

Potential Solutions

In the short term, Indonesia must focus on maximising chemical EOR by leveraging domestic palm oil, which can be used to develop an alternative surfactant. This is crucial in minimising dependency on petrochemical surfactants and enhancing energy independence.

Indonesia’s raw material for this is already secured. It is the world’s largest palm oil producer (with over 16 million hectares of plantation) that has struggled to expand its use beyond low-value manufactured products like cooking oil or biodiesel.

With proper planning and sufficient political will, Indonesia could build a domestic methyl ester sulphonate (MES) industry – derived from palm oil – that supplies EOR projects. The logic behind this is to create a circular economy whereby the agricultural “green gold” (palm oil) industry supports the production of “black gold” (oil). In other words, it is meant to establish a direct link between the agricultural and energy sectors.

Potential benefits are immediate and tangible: fewer imports, more local jobs, new downstream industries and a stronger bargaining position for oilfield operators.

The idea of integrating a palm oil derivative with an EOR process is not just a concept. Palm oil-based EOR (MES) has proven effective in field trials, raising recoverable oil by up to 15%. This indicates the huge potential benefits MES could afford to the EOR process in Indonesia’s old wells.

However, this solution is not a silver bullet, considering the trade-offs and political choices that must be made.

Firstly, supply is not guaranteed, with recent reports warning that ageing palm oil plantations and delayed replanting could actually cut palm oil output by 20% over the next five years. This is a supply-chain risk that could derail the vision of establishing Indonesia’s own MES industry.

Secondly, expanding palm oil production for new purposes without strict sustainability rules risks environmental damage and social conflict. Thirdly, and this is linked to the second point, EOR operation itself requires complex risk mitigation to ensure that oil gains do not come at ecological cost.

Politicians and policymakers must not get trapped in an endless dialectic of technology vs environment or industry vs community. They must strive to design a pragmatic, sequenced policy package that aligns incentives, secures supply and enforces standards.

Securing the feedstock, thus, emerged as a priority. The government should push companies to accelerate the replanting process and stabilise annual yield. Smallholders, especially, need access to finance, seedlings and technical assistance.

Financial support is also crucial. The government could help by underwriting pilot plants, offering temporary tax incentives for domestic MES producers and creating blended-finance facilities that lower the cost of capital for early projects. These are not giveaways; they are targeted, time-bound measures to bridge the valley of death between pilot success and commercial scale.

These measures would make projects financially viable; existing local-content rules would build domestic expertise, and offtake deals would lock in supply-chain stability.

Ensuring environmental rules and safety must not be compromised. EOR projects must meet strict chemical-handling standards, transparent reporting on produced water and third-party environmental audits. Without these safeguards, the reputational and ecological costs will outweigh any short-term gains.

Governance must also be coordinated. The biggest barrier to this idea is neither chemistry nor technology but bureaucracy. Energy, agriculture, trade, and environment ministries must not work in silos and synergise under a single, accountable taskforce with a clear mandate and public reporting.

Predictions and Pitfalls

To get to the finishing line, Indonesia must shift focus away from exploring new areas to squeezing more oil out from old wells.

The right policy treats EOR as a bridge that can raise domestic production, improve fiscal returns and create industrial capacity that can be repurposed for greener chemicals as well as bio-based industries over time. Meanwhile, revenues from revitalised fields can be earmarked to accelerate renewable deployment.

While more drilling facilitated by the EOR process could boost reserves, today’s market and policy trends present risks. The stratospheric-high oil price, instigated by the war in West Asia, might encourage investment in EOR, but if and when the price drops, so might the interest.

Critics have also said that investing in EOR and palm-based chemicals locks Indonesia into a fossil-fuel future. This is a true concern, but to suggest the country must choose between energy security today and clean transition tomorrow is also a fallacy. Indonesia’s commitment towards net zero by 2060 would eventually diminish fossil fuel projects, but for now oil is still required as a “baseload” energy source to maintain national energy security.

If the pursuit for a domestic EOR industry proves successful, oil output could rise substantially; otherwise, Indonesia must continue importing pricey petrochemical surfactants from abroad.

In the end, success depends on factors both within and beyond Indonesia’s control: global price, technology, policy, and sustainable practice will determine whether Indonesia could achieve its 1 million BOPD by 2030.

Conclusion

Palm oil-based EOR offers Indonesia a direct lever to revitalise mature oil fields while deepening downstream oleochemicals. Success requires standardised MES production under strict sustainability rules, targeted fiscal instruments and formal integration of EOR into the national upstream roadmap.

With abundant crude palm oil as feedstock and extensive mature oil wells, Indonesia holds structural advantages. Converting this into higher output hinges on coordinated policy execution, infrastructure readiness and industrial alignment.

Palm oil-based EOR is not merely feasible; it is a strategic imperative to turn Indonesia’s resource endowment into resilient energy security.

Reinvigorating Indonesia’s old wells through palm oil-based EOR is more than a technical fix; it is a symbol of independence. Expanding palm oil downstream for EOR technology would prove that Indonesia is no longer just a market for global innovation but also a nation capable of creating solutions on its own.

Achieving the 1 million BOPD target through domestic strength will send a powerful message to the world that Indonesia’s natural wealth is the foundation for its own energy security and technological progress. By integrating green gold with black gold, Indonesia proves that its own land and ingenuity can fuel true energy independence.

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• TAGS:
• Indonesia
• Sustainability